It is budget week. The owner, the GM and the revenue manager sit around one spreadsheet.
Last year’s hotel marketing budget was a percentage of revenue. Someone proposes adding half a point. Everyone nods.
Nobody asks which dates need the money, or what last year’s spend earned.
That meeting is expensive.
U.S. hotels typically spend less than 2.5% of room revenue on marketing, payroll included (Hospitality Net).
Expedia reported $6.8 billion in direct selling and marketing costs in 2024, half of its $13.7 billion revenue (Expedia 2024 10-K). That covers performance and brand marketing, not advertising alone.
You will not outspend an OTA. You can out-allocate one.
This guide shows how to split your hotel marketing budget by funnel stage, judge each stage on what it earns, and move money when the calendar changes. It is for owners, GMs and revenue managers who want a commercial strategy that shows up in hotel commercial performance, not clicks.
Why “Percentage of Revenue” Is the Wrong Starting Point
The benchmark everyone quotes
Max Starkov argues hotels should spend at least 4 to 6% of total revenue on marketing, excluding payroll.
Others on the same panel suggest new, luxury or repositioned hotels may need 10 to 25%, while mature properties can sustain 5 to 10%.
Useful as a sanity check. Weak as a plan.
What the percentage hides
It treats every room night as equal. They are not.
A peak-season Saturday often sells without help. A shoulder-month Tuesday does not.
Scott Falconer, on the same panel, argues budgets should be tied to outcomes such as incremental revenue, RevPAR or occupancy uplift.
Good hotel budgeting and forecasting starts from the dates you need to fill, then works back to the spend.
The Four Funnel Stages, and the Job of Each
Every marketing dollar does one of four jobs:
Awareness: puts your hotel in front of travellers who are not yet planning.
Consideration: keeps you in the comparison once they are.
Conversion: wins the booking on your own website.
Retention: brings the guest back without paying for them twice.
Each stage pays back on a different clock. Judge all four on last-click return, and your hotel marketing budget drifts to the bottom of the funnel and stays there.
Stage 1, Awareness: Paying for Future Demand
What sits here
Destination and experience content
Video and social reach in your source markets
PR, partnerships and travel trade presence
How to judge it
Do not judge awareness on next week’s bookings.
According to a Google study with industry partners, marketing returns in months 5 to 24 matched those of the first four months. The study covered ecommerce, not hotels, but the logic holds: demand built now books later.
WARC’s The Multiplier Effect (2025) used Analytic Partners’ ROI Genome data, mostly US advertising across categories. Moving from performance-only to brand plus performance lifted total revenue ROI by 25% to 100%, with a median of 90%. It is a cross-category finding, not a hotel one.
Track branded search and direct traffic from target markets.
Awareness is where a hotel marketing strategy earns tomorrow’s demand. Cut it to zero and conversion costs climb later.
Stage 2, Consideration: Staying in the Comparison
What sits here
Metasearch placements
Retargeting past website visitors
Review management and rate parity checks
Metasearch is where hotel marketing strategy and distribution overlap most, so give it its own line.
Where hotel revenue management meets marketing
A guest comparing prices sees your rate and your ad side by side.
If an OTA shows a lower price, your consideration spend funds their booking.
Rate parity is a hotel revenue management task with a direct marketing cost attached.
The attribution trap
Google, Meta and metasearch can each claim credit for the same booking.
Stage 3, Conversion: Where Direct Bookings Are Won or Lost
What sits here
Brand search campaigns that defend your own name
Booking engine speed, layout and payment flow
Direct-only benefits that are visible before checkout
Why this stage carries your hotel direct booking strategy
Skift Research’s Hotel Distribution Outlook 2024 forecasts that by 2030, direct digital channels will generate $409 billion in global hotel gross bookings, against $333 billion from OTAs (Skift).
A Skift survey of hoteliers found a goal of cutting indirect bookings to 34% by 2030, down from 53% in 2024 (Hospitality Net).
Your hotel direct booking strategy should set a target direct share by month, then measure spend against it.
Fix leaks before adding spend
More traffic into a leaking booking engine raises cost, not bookings. Fix checkout and mobile speed first.
A hotel direct booking strategy that funds traffic before fixing conversion pays twice.
Stage 4, Retention: The Cheapest Booking You Will Buy
Past guests already know you. You already hold their email.
Max Starkov, drawing on NextGuest’s hotel client data, puts the all-in cost of direct online bookings at 4.25 to 4.5%, against 15 to 25% for OTAs.
Retention spend covers CRM, pre-arrival and post-stay email, and past-guest offers.
Give repeat stays their own line in hotel budgeting and forecasting, so they are planned, not hoped for.
Retention is the quietest part of a hotel direct booking strategy, and often the most profitable.
Turning the Funnel into a Hotel Marketing Budget
Set the split by purpose, then judge it by stage
Our 50-30-20 framework sets the split by purpose: direct, brand and testing.
Purpose decides the shares. The funnel stage decides how each share is judged.
Start from lifecycle, question the season
One guideline cited on Hospitality Net: new hotels at 10% of projected revenue, established properties at 4 to 6%, and high season raised by 20 to 30%.
We would question the last point. If peak dates fill on their own, extra peak spend buys bookings you would have received anyway.
Move money monthly, not annually
Review pace against forecast every month.
Shift spend towards dates and markets that are behind. Pull it from dates that will sell regardless.
Feed actual pickup back into hotel budgeting and forecasting before the next review.
Make revenue and marketing read the same dates
Hotel revenue management sets rate and availability by date.
Hotel marketing strategy sets spend by channel and audience.
On different calendars, one team discounts the dates the other is paying to fill.
Hotel commercial performance is what remains after commission, ad cost and acquisition cost.
Use incremental net margin as the common measure across all four stages.
Before cutting a stage, check its delayed and indirect effect on hotel commercial performance. Awareness and retention rarely pay back in the same month.
A Three-Question Budget Test
Answer these for last quarter:
Which funnel stage received the most spend, and what did it earn after commission and ad cost?
How much spend went to dates that sold out anyway?
Did revenue and marketing review pace from the same report?
If any answer is “we don’t know”, your hotel budgeting and forecasting runs on habit, not margin.
How pulse. Supports This
pulse. reads your PMS, rate feed, booking engine, ads and website as one.
It gives your team ranked recommendations to approve, each showing what the move earns after cost.
Marketing and hotel revenue management work from the same dates and the same numbers.
Your hotel marketing strategy is judged on margin, not platform-reported return.
Fund the Dates, Not the Habit
A percentage tells you how much to spend. The funnel tells you where. Margin tells you whether it worked.
If no one can say what last quarter’s spend earned, that is where your commercial strategy needs work first.
With roots in the world’s leading hospitality brands, we bring proven, best-in-class solutions and global insight to every client we serve.
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